All those commercial airplanes jetting 30,000 feet overhead at 500 mph are leaving more than wispy contrails in their wake.
Delta Air Lines, for example, drops an annual tax payload of about $75,000 over Daggett County without ever landing a jet there. In fact, Delta is the county's second-largest taxpayer.None of the airlines operating out of the Salt Lake International Airport take off or land in Tooele County either, but $64.5 million of the assessed value of their "mobile flight equipment" is taxed there.
Daggett, Tooele, Box Elder, Duchesne and many other Utah counties crisscrossed by the highways in the sky have been sharing in - and counting on - the financial rewards of Salt Lake City's air transportation hub for decades.
Under the current taxing system, $640 million worth of the airlines' assessed valuation is apportioned according to a complex formula based on flight paths as well as the location of their primary base of operation.
When all the divvying up is done, Salt Lake City and Salt Lake City School District are left with only 20 percent of the pie, even though almost all the commercial aircraft doing business in Utah do it in their taxing jurisdiction.
But all that could change if the Utah Supreme Court takes the city's side in a legal dispute over the legality of the current tax structure. The court heard arguments on both sides of the issue during a two-hour hearing Tuesday afternoon.
"An airplane flying 30,000 feet over a county for a few seconds is somehow considered to be within its taxing jurisdiction," said Assistant Salt Lake City Attorney Steve Allred. "That defies common sense and reason."
It makes sense to apportion the value of railroads whose tracks cross county lines or trucking firms whose vehicles roll over multi-county highways, but airplanes don't pose any kind of a tax burden on the counties they fly over, Allred said.
"Highways are a capital improvement, but the highway in the sky is only present at the Salt Lake International Airport, not some theoretical boulevard in the air," Allred said.
"A 767 flying from Salt Lake City to New York City doesn't present itself in Daggett County."
Salt Lake City School District attorney Steve Hale agreed, saying the law requires the Tax Commission to apportion taxing value based on "situs and nexus." A property tax can't be levied on property not within the taxing entity's jurisdiction, he said.
"It's the landing and taking off that create the nexus," Hale said.
However, State Tax Commission attorney Kelly Wright argued that the apportionment of airline value has a rational basis. States in which airlines do business are entitled to assess a portion of their value, he said.
"What creates the value of the airline?" he asked. "The very fact that the property value has the ability to fly."
So, in Utah, the Tax Commission apportions the value to taxing jurisdictions over which the airplanes fly. An airplane landing in Salt Lake City may be carrying a tourist whose destination is San Juan County, Wright said.
"An airline is not an aircraft," added Blake Ostler, the attorney for a consortium of school districts opposed to Salt Lake City's claim on the airline tax. "What is being assessed is the airline."
He likened it to railroads and trucking firms that tax county resources and are taxed based upon apportioned value.
Justice Michael Zimmerman seemed skeptical, saying, "The critical ingredient you're missing is the nexus with the county. A railroad runs across its jurisdiction."
Would these counties have a right to tax a commercial satellite flying 20,000 miles over their territory? Zimmerman wondered.
Justice I. Daniel Stewart also pressed Wright and Ostler on the situs (location) and nexus (connection) issues. "The situs of all tangible property is the site where it's located. If you read that literally, it's the airport where they take off."
The nexus depends upon location, Stewart added, "so that doesn't seem to apply to Daggett County."
The justices took the issue under advisement. Third District Judge Leslie Lewis heard the case in place of Justice Christine Durham, who recused herself.
If the court rules in Salt Lake City's favor, city property owners would see a significant property tax decrease while property owners in other parts of the state - particularly Daggett County - would face hefty tax increases.